New Laws Aim to Help Resolve Hospitality Sector IP Disputes

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New Laws Aim to Help Resolve Hospitality Sector IP Disputes

The rapid growth of microbreweries and craft distillers has seen a rise in branding and trade mark disputes in the sector. Later this year, changes are due to long-standing legislation, which at present strictly limits what can be said in pre-action correspondence.

Susan Snedden looks at the new IP regime and how it could help those who find their IP rights have been infringed.

Why are there so many IP disputes in the drinks sector?

With hundreds of new companies being set up, all looking for catchy brand names for their products, the risk of inadvertently picking a brand is already in use has increased. Unsurprisingly, hospitality sector businesses, such as pubs and restaurants, have sometimes been drawn into the fray.

Such disputes often relate to brand names for products; as stockists of allegedly infringing products, pubs and restaurants can be drawn in as ‘secondary infringers’.

Similarly, disputes about pubs and restaurant business names are also common. The recent case between BrewDog (pictured) and the Lone Wolf pub, although eventually settled amicably, was a conflict between a product name and a pub name: the Scottish brewer threatened the Birmingham publicans with legal action because their pub name was the same as the one BrewDog had chosen for its new spirits range, and protected by registering a trade mark for it.

What does the current law say about pre-action correspondence?

A common approach to commercial disputes is for the parties involved to communicate with each other, with a view to negotiating a resolution and thereby avoiding the time, cost and uncertainty involved in court proceedings. But in the case of IP disputes, current legislation places strict limits on what may be said in pre-litigation correspondence: If the IP owner oversteps the mark and goes beyond what is permitted in the legislation, the alleged infringer can turn the tables and sue the IP owner for ‘unjustified threats’.

These laws were originally brought in to ensure that IP owners communicated directly with primary infringers (i.e. the parties applying the brand to goods, or supplying services under the given brand), while protecting parties caught in the middle, such as companies merely stocking and selling disputed products (known as secondary infringers).

However, in practice, the current laws also limit what may be said to primary infringers. This can catch out brand owners who are not familiar with the legislation, and can result in the alleged infringer threatening to sue them. This can make it challenging to negotiate disputes out of court.

What is changing?

The Intellectual Property (Unjustified Threats) Act 2017, received Royal Assent in April and is expected to become law later this year. Aiming to improve the current state of affairs it allows more to be said to primary infringers but without removing the protection offered to potential secondary IP infringers.

Meanwhile, IP owners will be able to mention acts of secondary infringement of trade marks (such as advertising and selling the allegedly infringing products) to primary infringers and will, in order to gather information, have more scope to communicate with potential secondary infringers, such as restaurateurs and publicans who stock allegedly infringing products.

Will caterers and publicans be more at risk of being drawn into disputes?

No, secondary infringers are still protected. In fact, the new law should make it less likely that pubs and restaurants are drawn into expensive court actions relating to products. It should also make it easier and less risky for them to tackle businesses that infringe their own brand.

In summary, it will be easier, quicker and more cost-effective for IP owners to protect their hard-won brands, but the new legislation still restricts what may be said. Care and a real understanding of the legal implications will, therefore, be required when dealing with brand disputes.